A real issue for the beltway bobbleheads – online sales

There are only a few scattered bushes to break up the grey sands of this desert scene.

Even Gabrielle Giffords could not save the boys and girls in our nation’s capital fiddling whilst the nation burns from embarrassing themselves before the world.  It is all in the definition – we think they should be working on making the country a better place to live; while they, the makers of the nations laws are convinced their job is posturing and pandering – the objective of which is being reelected.  Way out here in the hinterlands bordered by mountains and deserts their reelection is the farthest thing for our minds.  We in the state with the least number of registered voters, inhabitants and natural resources have other things to contemplate; we have the highest unemployment rate in the nation (three times what it was during the boom years), the highest foreclosure and bankruptcy rates (we had the fastest growing communities and real estate values in those years) and the largest percentage of empty houses in the country (185,000 in a state with a little over 2 million people).  In July/August 2011 Reno has 25 percent of its office and warehouse space vacant and 18 percent of its retail space sitting idle and empty.  Our government revenue sources – real estate taxes, gaming and sales taxes are all still declining.  That is just Nevada;  Nevada is not alone, the national economy may be officially out of the recession, but recovery is a very long way away.   Now, I am not suggesting that the job of lawmakers is exclusively finding ways to fix the economy – but given the state of the economy in Nevada and the rest of the nation, the economy should certainly be the most important topic on their agenda. And the solutions are not as simple as the members of Congress have made them out to be.

The accidental or coincidental economic downturn and changing technology that brought Borders Books down is at work everywhere and it is time we faced it head-on.  The economy will recover, some day; but somethings are never going to be the same, not just cars in Detroit or casinos in Reno, but retail on every main-street (and malls) in the good old US of A.  The 18 percent of vacant retail space may be a sign of the recession, but in a year or two the number is likely to be larger and have nothing to do with the recession.  It will be the direct results of Neflex, Amazon and Google – second quarter online retail sales were estimated to be up 17 percent – the kind of growth bricks and mortar stores might have seen in 2006, but probably none, but start-ups, will ever see again.   The money that is spent online is money not spent locally and that affects jobs, real estate and tax revenues – in one way or another it affect everything in our lives.

To really recover from the recession Reno, the state of Nevada and the nation are going to have to come to grips with the Internet and its impact on spending and tax revenues.  For Nevada the other shoe has yet to drop, Congress is certain to debate online gaming again this year; eventually it will be legalized – a lesson Mubarak, Borders and Bell Telephone have been forced to learn – a compelling technology will not be denied.   And when online gambling is legal, Nevada will lose another significant percentage of its casino revenues.  How much?  I have no idea, but 10, 15 or 20 percent would not be unreasonable guesses; even 10 percent will be dramatic for Nevada.  And just to remind everyone who does not work in a casino, that will also mean another 10 percent cut in government revenues and therefore another 10 percent cut in public services – schools, parks, police, fire, roads and libraries.

Online gambling and retail spending are going to continue to eat into governmental revenues; and things are not so good at the moment – what happens when they get worse?  The latest round of state budget crises is likely to be repeated again and again.  At the current level of funding California and 7 other states are contemplating selling state parks and privatizing other services. It is frightening to think what cuts will be made in the next round of cuts, or the one after that.  I am hoping the boys and girls of the beltway find some time in their very busy schedule to address the real issues we are facing.


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August 2011
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